Bankers walk around in jeans and T-shirts, customers file insurance claims by emailing photos of the damage and urgent questions are sent—and quickly answered—by text message.

These scenes aren’t taking place in a first-world startup, but in Johannesburg’s business district, where some banks are having their own Silicon Valley moment. To lure the continent’s growing consumer class and differentiate themselves from mobile money and each other, Africa’s biggest banks are investing billions in digital banking technology.

The lenders’ innovation is spurred in part by the surging popularity of mobile-money alternatives to traditional banking, such as M-Pesa. The East African money-transfer service, operated by a subsidiary of Vodafone PLC, allows customers to send and receive funds as well as pay for services, all without having a bank account. M-Pesa has more than 25 million active users across the continent, while Standard Bank Group Ltd., Africa’s largest lender by assets, has 15 million personal and business banking customers.

Banks are now embracing technology as they fight to stay relevant.

Absa Bank Ltd., a subsidiary of Barclays Africa Group Ltd., has poached designers and product managers from Google Inc. and Amazon.com Inc. It introduced a new version of its app in May and launched an overhauled version of its website in August. A few months ago, it became the first bank in the world to offer banking services via Facebook Inc.’s messenger service, where customers can check their balances, buy cellphone airtime or data and make a payment.

In the vein of Silicon Valley, Absa now celebrates its botched ideas. “We’ve got this new thing at the bank these days called ‘failure parties,’ where people come together and celebrate their failures and learn why they’ve failed,” Mr. Veasey said.

Head of customer experience and design Craig Corte decided to make “Yoda” and “pirate” language options in the bank’s chat app, but the former got shut down because compliance was worried there might be a licensing issue. “Banking is generally not that much fun, so we make it fun,” Mr. Corte said.

The banks’ innovation drive comes amid an increasingly challenging economic backdrop. Slow growth on the continent in the wake of the commodity-price crash has led Barclays PLC to sell down its stake in its Africa unit, reducing it to just over 50%.

But many banks are doubling down. Standard Bank has invested 20.1 billion South African rand ($1.4 billion) in online and mobile technology between the start of 2015 and the middle of this year. That has helped draw customers into the digital age: About 90% of transactions are now done either online or via its mobile app.

“The moment you make it easy and convenient, it kind of just grows on its own,” said Peter Schlebusch, Standard Bank’s chief executive of personal and business banking.

Customers of First National Bank, or FNB, a division of South African financial-services provider FirstRand Ltd., can apply for mortgages online.

FNB introduced two low-end smartphones with an FNB-branded SIM card in partnership with a local carrier last year. “When you talk about the digital migration of customers, we’ve taken a proactive approach to bring customers into the smartphone space,” said Yolande Steyn, the bank’s head of innovation. The phones, which cost 59 rand ($4.23) or 150 rand ($10.76) a month over a 24-month period, come with the FNB app preinstalled.

Despite universal concerns about the safety of personal information, in African cities such as Johannesburg, where crime is rife, not carrying cash is often viewed as safer, not to mention more convenient. Many South African banks also offer security features, such as instant text messages to confirm that a purchase has been made with a credit card, to combat fraud.

Fred Swanepoel, chief information officer at South African lender Nedbank, visits tech incubators and venture-capital firms in Silicon Valley once or twice a year to stay on top of developing trends. Nedbank is spending about 1.8 billion rand a year through at least 2020 on technological and digital upgrades to its banking system, about 70% of capital expenditures. Last year, it bought a 20% stake in Ecobank Transnational Inc., which has operations in 36 different countries across the continent.

“Sometimes I can see, I absolutely stun them,” Mr. Swanepoel said, of talking to other banking executives from major players like J.P. Morgan at global conferences. “From a technological perspective, they are very far behind us.”

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Peter Omondi - Founder and Editor in ChiefEducation: Universite De Geneve- International Organization Management: Universite Catholique de Louvain- International Human Right Law Our aim is to gather the different African narratives from scattered sources and localize the narratives for our readers.